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India to prioritise 15 sectors including semiconductors,

labour-intensive sectors

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Nearly $1 billion to be spent on manufacturing hubs,

funding

advanced sectors

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Focus on cutting red tape, speeding approvals and aligning

tariffs

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Divergent policies by India's federal and state

governments have

weighed on investment

By Nikunj Ohri and Sarita Chaganti Singh

NEW DELHI, Jan 23 (Reuters) - India will seek to triple

the nation's exports by 2035 by boosting manufacturing through

structural changes rather than with hefty spending, according ‌to

two government officials.

In Prime Minister Narendra Modi's third such attempt, the

South Asian nation is prioritising manufacturing in 15 sectors,

including high-end semiconductors, metals and the

labour-intensive leather ​industry, aiming to lift India's growth

and boost annual goods exports to $1.3 trillion, they said.

Modi's government has twice failed ‍to double the share of

manufacturing to 25% of gross domestic product - with a "Make in

India" ⁠campaign in 2014 and ⁠a $23 billion package of incentives

in 2020.

"In past years, several government initiatives to boost

manufacturing growth have led to modest, incremental progress at

best. What is needed ‌is a bold, focused and cohesive strategy to

drive transformative change," ​according to a government official

involved in drafting the policy.

MODEST FUNDING TO BE DECIDED BY GOVERNMENT PANEL

The government will spend about 100 billion rupees ($1

billion) to build infrastructure for about 30 manufacturing hubs

across ⁠the targeted sectors while providing grants of $218

million for advanced ‍areas such ​as chips and energy storage,

said the officials, who asked not to be named because they were

not authorised to speak to media.

The Finance Ministry and government think tank NITI Aayog,

which is tasked with preparing ‍the policy, did not respond to

requests for comment.

Funding this time is modest as the plan focuses on easing

regulatory and compliance burdens, the biggest impediment to

Indian manufacturing, rather than doling out subsidies, the

officials said.

Financial support to industries will be decided case by case

with recommendations from a new government panel to

administrative departments, replacing the pre-budget fiscal

packages of earlier schemes, they said.

The new structure, called the National Manufacturing

Mission, was announced in the budget last year but details ​were

not disclosed. ‍Details could be announced in the budget on

February 1, but that will be decided closer to the date, the

officials said.

FOCUS ON CUTTING RED TAPE

The panel's focus will be to ensure faster regulatory

clearance, approvals ​for land and cheaper financing for large

projects, the officials said. It will be chaired by a minister

and composed of bureaucrats, including the cabinet secretary,

they said.

It will oversee the building of manufacturing hubs for the

15 sectors, and work with state governments to assure steady and

cheap electricity supplies for such units, the sources said.

Manufacturing hubs have been identified based on existing

infrastructure, geographic advantages and proximity to ports,

the officials said.

Divergent policies by India's federal and state governments

have weighed on investment and hampered manufacturing. States

have followed different ​regulations for labour and business

compliance, increasing costs for companies operating in multiple

states.

The proposed panel would coordinate with states to ease

regulations such as those requiring multiple permits for power,

land and water.

It would also recommend cutting red tape by reducing

overlaps between quality and standards checks, and suggest

aligning tariffs to ‍industry requirements and "national

priorities", the sources said.